Crude oil prices rose by more than 2% at the end of trading today, Wednesday, April 12 (2023), to continue to reap gains for the second consecutive session, after the release of US inventories data.
This comes at a time when US inflation data showed a decline in the consumer price index in the United States to 5% in March 2023, compared to 6% in the previous month, indicating that the Federal Reserve may reduce the pace of raising interest rates in the future.
The Energy Information Administration raised crude oil price forecasts by nearly 3% in 2023, after moves announced by OPEC+ countries to cut production, but lowered estimates of demand for crude, in light of fears of a global recession.
Crude oil prices today
At the end of the session, Brent crude futures for June 2023 delivery rose 2%, to record $87.33 a barrel.
West Texas Intermediate crude futures – for May 2023 delivery – increased by 2.1%, recording $83.26 a barrel, the highest level for this most active contract since November 2022, according to what was seen by the specialized energy platform.
And crude oil prices ended their dealings, yesterday, Tuesday, April 11, with an increase of about 2%, after a volatile session, to record the highest level since January 2023.
Oil market analysis
Crude oil prices got a boost in the session on optimism that the Federal Reserve is close to ending its cycle of rate hikes, making dollar-denominated oil cheaper for buyers holding other currencies.
Philadelphia Fed President Patrick Harker said on Tuesday he feels the US central bank may soon finish raising interest rates, while Minneapolis Fed President Neel Kashkari said he thinks inflation is now at 5% as measured by the measure. The Fed’s favorite.
However, market analyst at IG, Yip Jun Rong, said that any “a higher-than-expected rise in inflation could pave the way for another 25 basis point rate hike in June.”
US oil stocks
Meanwhile, data from the US Energy Information Administration showed an increase in oil stocks in the United States by 0.6 million barrels during the past week, while analysts polled by Reuters expected a decline in stocks by about 600,000 barrels.
Meanwhile, gasoline inventories fell by 0.3 million barrels, and distillate inventories fell by 0.6 million barrels last week.
demand for oil
In another negative case for oil demand, the International Monetary Fund, yesterday, Tuesday, April 11 (2023), cut its global growth forecast for 2023, citing the impact of higher interest rates.
In addition to inflation data, the market awaits more clarity on oil demand and supply, as monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency are released on Thursday and Friday, respectively.
Yesterday, the US Energy Information Administration cut its forecast for OPEC oil production by 0.5 million barrels per day for the rest of 2023, and cut its forecast for global oil demand growth for 2023 by 40,000 barrels per day.
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